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Velocity Financial (VEL) 7 Nov 24 2024 Q3 Earnings call transcript

AInvestFriday, Nov 8, 2024 8:00 am ET
1min read

In Velocity Financial's third quarter earnings call, the company reported yet another record-breaking performance, showcasing its resilience and adaptability to the ever-changing market conditions. With a 64% increase in origination volumes and a net portfolio growth of $876 million, Velocity Financial is poised for a strong future.

A Strong Foundation of Financial Health and Growth

Velocity Financial's financial health is robust, with a net interest income increase of 29% and earnings growth of 31%. The company's ability to maintain tight credit levels and a low weighted average LTV of 63% demonstrates its commitment to risk management and financial prudence. Furthermore, the successful resolution of delinquent assets and the healthy real estate markets in Velocity Financial's niche indicate a solid foundation for the company's growth.

Navigating the Market with Confidence

Velocity Financial's management team expressed confidence in the company's performance and its ability to capitalize on growth opportunities. The company's strong position in the capital markets, with a 6x oversubscribed October securitization, underscores its financial strength and market appeal. The company's pipeline is healthy and growing, with over 900 applications for more than $450 million in UPB in October alone. Velocity Financial is well-positioned to exceed its portfolio goal of $5 billion of UPB by 2025.

A Focus on NPLs and Credit Performance

Velocity Financial's special servicing team has been instrumental in resolving delinquent assets, contributing to a 3.4% gain over UPB in the quarter. The company's strong credit performance and management of nonperforming loans highlight its commitment to maintaining a healthy portfolio. The success of the October securitization, with an excellent cost of funds of approximately 6%, underscores Velocity Financial's ability to navigate the market and secure favorable financing terms.

Looking Ahead with Optimism

Velocity Financial's outlook is optimistic, with a strong market and a healthy pipeline. The company's consistent performance and solid financial position are testament to its resilience and ability to adapt to market conditions. As the company continues to grow and expand its offerings, it remains committed to creating long-term value for its partners and shareholders.

Key Takeaways

Velocity Financial's third quarter earnings call highlighted the company's strong financial health, robust growth, and strategic market positioning. With a focus on maintaining tight credit standards and managing nonperforming loans, Velocity Financial is well-positioned to navigate the market and capitalize on opportunities for growth. The company's confidence in its performance and future prospects is a testament to its resilience and adaptability in the face of market challenges. As Velocity Financial looks ahead to the future, it remains focused on delivering value to its stakeholders and driving sustainable growth in the financial sector.

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